Correlation Between Treasury Wine and Willamette Valley

Can any of the company-specific risk be diversified away by investing in both Treasury Wine and Willamette Valley at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Treasury Wine and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Treasury Wine Estates and Willamette Valley Vineyards, you can compare the effects of market volatilities on Treasury Wine and Willamette Valley and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Treasury Wine with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and Willamette Valley.

Diversification Opportunities for Treasury Wine and Willamette Valley

0.44

Correlation Coefficient

Treasury Wine  Willamette Valley

Very weak diversification

The 3 months correlation between Treasury and Willamette is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Treasury Wine is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Treasury Wine Estates are associated (or correlated) with Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of Treasury Wine i.e., Treasury Wine and Willamette Valley go up and down completely randomly.

Pair Corralation between Treasury Wine and Willamette Valley

Assuming the 90 days horizon Treasury Wine Estates is expected to generate 1.17 times more return on investment than Willamette Valley. However, Treasury Wine is 1.17 times more volatile than Willamette Valley Vineyards. It trades about 0.03 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.07 per unit of risk. If you would invest  752.00  in Treasury Wine Estates on September 13, 2024 and sell it today you would earn a total of  19.00  from holding Treasury Wine Estates or generate 2.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Treasury Wine Estates  vs.  Willamette Valley Vineyards

Treasury Wine Estates

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Treasury Wine Estates are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Treasury Wine is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Willamette Valley

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Willamette Valley Vineyards has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Treasury Wine and Willamette Valley

The main advantage of trading using opposite Treasury Wine and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, Willamette Valley can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Willamette Valley will offset losses from the drop in Willamette Valley's long position.

The idea behind Treasury Wine Estates and Willamette Valley Vineyards pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.